Fed's Broaddus to retire next August

WASHINGTON (CBS.MW) - J. Alfred Broaddus, the president of the Richmond Federal Reserve Bank, announced Thursday that he plans to step down from his post next August.

"It has been a great privilege to serve the Federal Reserve, and, most importantly, the public in this role," Broaddus said in a statement released by the Richmond Fed. Broaddus will turn 65 next July.

The Richmond Fed's board of directors will choose a replacement for Broaddus, subject to the approval of the Federal Reserve Board in Washington.

There have been efforts in Congress to give the Senate the authority to confirm Fed bank presidents, but those reform efforts have failed.

Fed watchers expect the replacement to come from within the Richmond Fed's district, which covers South Carolina, North Carolina, Virginia, West Virginia, Maryland and the District of Columbia.

Economists said Broaddus was a fierce hawk when he was selected to lead the Richmond Fed in Jan. 1993.

But, over the past several years, Broaddus has moderated his views, and began to highlight the danger of deflation.

"He shifted his views and became more open minded on the inflation outlook," said Mike Moran, chief economist at Daiwa Securities America in New York.

"I don't think it has anything to do with his aversion to inflation. I think he just sees inflation as not much of a threat right now. He's been much more moderate than he was in the early portion of his career," Moran said.

Broaddus spent his entire professional career at the Richmond Fed, starting as an economist in 1970 and becoming senior vice president and director of research in 1985.

Broaddus's resignation is part of a subtle changing of the guard underway at the Fed. By next August, there will be new district bank presidents in Richmond, San Francisco, New York, and Cleveland, one-third of the Fed's 12 district banks.

But analysts said that these changes pale in comparison to the changes that will come when Federal Reserve board chairman Alan Greenspan retires.

"Greenspan is the key," Moran said.

"This has been kind of a Greenspan-leads-them-around kind of Fed and the question is really, what is going to happen when Greenspan's gone," said Robert Brusca, chief economist at Ecobest Consulting.

Broaddus almost always laced his speeches on the economy with jokes. He once told an audience in Washington that he didn't like financial wire services, saying that, if he started reciting the Declaration of Independence it would not take long before a currency trader somewhere in the world was shorting the pound because of the reporting of financial wire services.

Greg
Robb

Greg Robb is a senior reporter for MarketWatch in Washington. Follow him on Twitter @grobb2000.

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